Poor Mel Watt. Affordable housing activists are angry with the FHFA Director because he isn’t going “full retard” on affordable housing.
Oct. 1 (Bloomberg) -By Clea Benson- After a speech to bankers in Raleigh, North Carolina last month, Melvin L. Watt, chief regulator of Fannie Mae and Freddie Mac, called on a man in the back of the hotel ballroom.
“Does the National Housing Trust Fund have the possibility of being capitalized?” the man asked, referring to a low-income
housing program that’s supposed to get a cut of revenues from the two mortgage-finance companies.
Watt, who has yet to approve funding of the trust, said he’s studying the issue. ‘He wants me to go way off script,’’ Watt told the group. “I can’t do that.”
Watt’s circumspect style and scant policy changes in his first nine months as director of the Federal Housing Finance Agency have drawn criticism from some of the same housing advocates who pushed President Barack Obama to appoint him. The National Low Income Housing Coalition and other groups said they expected Watt, the most powerful housing official in America, to move quickly to help troubled borrowers and lower-income families shut out of the two-year housing recovery. Instead, he is maneuvering cautiously, asking for public feedback on many issues — and earning accolades from the mortgage industry.
“Mel Watt has been a huge disappointment,” said Peter Dreier, a public policy professor at Occidental College in Los Angeles who wrote a paper arguing that the FHFA should allow debt reductions for borrowers with Fannie Mae and Freddie Mac mortgages. “No one I know in the housing community understands why he’s sitting on his hands.”
Because he is taking his job as regulator of Fannie Mae and Freddie Mac seriously and not acting impulsively?
Quite frankly, Mel Watts has been a pleasant surprise for me. He seems to be thoughtful and asking for opinions from different quarters. I was worried that he would do want Professor Dreier was hoping: open the floodgates for affordable housing … again.
But you see kids, this is a different world today than it was when President Bill Clinton started pushing homeownership in 1995. Real median household income is back to 1995 levels (and is stagnant where it was growing after 1995). Mortgage purchase applications are in witness protection thanks to too few households being able to meet DTI requirements
Notice that house prices are considerably higher now than in 1995, as in labor force participation. Same real median household income, much higher house prices.
I am pleased that Mr. Watt is taking him time .. and he may yet do all of the above that affordable housing advocates want. But lower credit standards to solve a stagnant income problem is a difficult problem to solve.
Mr. Watt, thank you for not going “Full Retard” without careful consideration.